Jack Dorsey Faces Fierce Backlash After Calling Ether A Security

Block co-founder and CEO Jack Dorsey — also co-founder and former CEO of Twitter — has caused outrage in the Ethereum community after claiming that the network’s native token, ether (ETH), is a security.

Ether A Security?

Noted Bitcoin enthusiast and investor Jack Dorsey got into an online scuffle with multiple industry experts and prominent figures on Tuesday after designating ether as a security.

Amid the U.S. Securities and Exchange Commission’s lawsuit against Coinbase, Pierre Rochard, vice president of research at Riot Platforms, suggested that the San Francisco-based exchange should refocus its attention on Bitcoin. Rochard was referencing a 2015 post by Coinbase CEO Brian Armstrong, where he referred to altcoins as a “distraction” and implied that the company should instead “be focused” on Bitcoin.

Jack Dorsey voiced support for prioritizing the OG cryptocurrency amid regulatory pressures. The Twitter founder added that there are only three truly censorship-resistant technologies at scale today: tor, bitcoin, and nostr. While these technologies are presently not accessible to most people or even easy to use, Dorsey is convinced that they will be someday. 

As you are well aware, Dorsey is a long-time Bitcoin supporter, who has expressed his strong belief in its potential to become a global currency. Back in 2014, Dorsey predicted that Bitcoin could become the “native currency of the internet.” He has continued to endorse the flagship cryptocurrency and its underlying blockchain technology through his different ventures, including Block’s Cash App, a mobile payment service that lets users buy and sell BTC.

Asked by one Twitter user whether ethereum, the second-largest crypto by market cap, is a security, Dorsey simply replied: “Yes.”

Crypto Twitter Reacts

Dorsey’s remark prompted brutal backlash from crypto pundits, including ordinals proponent and independent developer at Taproot Wizards Udi Wertheimer, who indicated Dorsey was a “clown” in a Tuesday tweet.

Dorsey replied saying, “ETH is not a security? Teach me wizard,” to which Wertheimer shared a viral 2018 video where SEC chair Gary Gensler acknowledged that ether was not a security as it had attained sufficient decentralization. 

The Twitter war comes in light of the SEC launching high-profile lawsuits against Coinbase and Binance for allegedly offering a slew of tokens like Cardano, Solana, Polygon, Dash, Filecoin, and others, which the agency considers to be unregistered securities. 

Nonetheless, the Digital Asset director at VanEcK, Gabor Gurbacs, appeared to agree with Dorsey on Ether’s security designation. Gurbacs argued that Ethereum’s switch last year from a proof-of-work system to a proof-of-stake system for operating its network brought it closer in alignment with the SEC’s definition of a security.

An ether-as-a-security world would have serious consequences for the broader crypto industry. It is not, however, a foregone conclusion that the SEC will soon categorize ETH as a security.